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Remarks of Commissioner Dye to the 18th TPM Annual Conference

March 12, 2018

Introduction

Thank you so much, Michelle. I’m pleased to see so many distinguished colleagues and good friends in the audience today.

I hope the Women in Leadership breakfast becomes a regular event, because there are so many talented women leaders in our industry, all with interesting backgrounds and perspectives on the most important challenges facing us today.

I’m also pleased to see so many men here this morning. In my career, all of my professional sponsors have been men. There’s no question in my mind that we succeed not apart, but together.

As an aside, my favorite business author is Jim Collins – author of "Built to Last", "Good to Great," and others. He makes the point that the most important job of a leader and how you should spend most of your time, is hiring the best people: Get the best people on the bus.

There are two of the best people on the FMC bus at this conference, Rebecca Fenneman, Senior Executive Service Director of our Office of Consumer Affairs and Dispute Resolution, and Sean Watterson, one of the economists in our Bureau of Trade Analysis. I encourage you to take the opportunity to meet them.

Leadership and Mentoring

Since March is Women’s History month, I’m always invited during this time of year to speak at women’s leadership conferences around Washington.

I really enjoy it—later this month I’m speaking at the Commodities Futures Trading Commission and I look forward to meeting their commissioners. I’m also speaking at the Bureau of Printing and Engraving and I look forward to "free samples" of their "newly minted" products.

I’m also engaged as a mentor of young women and men through programs sponsored by several professional organizations to which I belong.

One of my favorite mentoring events is "speed mentoring" where mentees circulate among mentors for advice at 5 minute intervals. The US Chamber of Commerce has sponsored events of this type.

I’m sure many of you also mentor or coach others, with organized programs or within your own companies. I really enjoy the process, because you can’t engage on a personal level with someone else without recalling and examining your own past experiences.

Personal History

I graduated from the University of North Carolina where I learned to enjoy ACC basketball and yearn for opportunities to "BEAT DUKE"! If you’re not familiar with this competition, you’re missing one of the great rivalries of college sports, built upon a great deal of mutual respect.

My professional experience started after I graduated from the University Of North Carolina School of Law. I had never considered that I should be a lawyer—I really wanted to be a novelist.

Jeff Rowe, of the Discovery Channel reality show called "Dirty Jobs," emphasizes something I think is great advice: don’t chase your passion, follow opportunity! I’ve been fortunate to have been offered wonderful opportunities.

My first legal position was as special counsel at one of the North Carolina state psychiatric hospitals— that’s counsel for the 1700 patients, not the hospital. Great legal experience; and I also witnessed the tragic effects of mental illness on entire families.

My favorite law professor who was a retired military judge, suggested that I talk to the US Coast Guard about a position as a law specialist. Accepting the Coast Guard’s offer to become a Coast Guard Lieutenant, law specialist, began my maritime career, and I’m a "lifesaver" still. Semper Paratus!

I was given incredible opportunities as a commissioned officer in the Coast Guard, which included acting as a White House Social Aide during the Reagan Administration and teaching law at the Coast Guard Academy in New London, Connecticut.

After a couple of years with the Maritime Administration as legislative counsel, I was hired as a committee counsel on the former Merchant Marine and Fisheries Committee in the U.S. House of Representatives.

During that time we handled the Oil Pollution Act of 1990, enacted into law after the March 24, 1989 oil spill that occurred when the EXXON VALDEZ ran hard aground on Bligh Reef in Prince William Sound, Alaska.

In 1995, I joined the House Transportation Committee as staff director and counsel for the Coast Guard and Maritime Transportation Subcommittee. During my time there I handled the Ocean Shipping Reform Act of 1998, which promoted competition in ocean shipping, and also the Maritime Transportation Safety Act of 2002, to respond to the attack of September 11, 2001.

You never really leave the Hill. Senior Committee staff are related by blood! It’s a unique experience, and it gives you invaluable insight into what matters, and what doesn’t, in Washington.

I’ve been fortunate to have been nominated to the Federal Maritime Commission by President Bush and President Obama and confirmed by the United States Senate 4 times.

The more I learn about our maritime industry, the more respect I have for those in our business.

Industry Trends

On to business...

As most of you are aware, the Transpacific Stabilization Agreement (TSA), a rate discussion agreement covering the Asia/US trades, ended its 29-year history on February 8th. In closing its operations, TSA declared that its original mission "was no longer viable." What you may not know is that TSA’s decision to give up collective rate increases was one in a series of recent actions.

On January 5th, the rate agreement in the northbound Australia/New Zealand to US trade was terminated. The rate agreement in the US/Venezuela trade was terminated on January 10th. And on January 15th, the Pacific Islands Discussion Agreement was terminated.

TSA was by far the most important of these agreements, and its demise represents the capstone in a clear trend toward the elimination of carrier rate discussion forums. The three major strategic carrier alliances – the key operational agreements among the surviving shipping lines – remain of particular interest to our Economics and Competition Analysis bureau.

But the other clear trend we see is the increasing importance and expansion of port and terminal agreements. Tomorrow morning, for example, Griff Lynch and John Reinhart will be discussing the benefits of one of those port agreements, the East Coast Gateway Terminal Agreement.

Also the Port of Long Beach and Port of Los Angeles have an innovative FMC agreement that allows them to jointly work with interested stakeholders to improve cargo velocity, overcome obstacles to operational efficiency and make container movements a smoother and less costly experience for all involved.

And to the north, the ports of Takoma and Seattle have joined forces under an FMC ports agreement to establish the Northwest Seaport Alliance to make them stronger and more competitive.

So there are the trends: The rapid decline of carrier rate discussions and efforts to promote general rate increases, and the growth of innovative alliances among US seaports.

One final topic I’d like to mention is one that I heard a lot about in the FMC’s Supply Chain Innovation Teams initiative over the last couple of years – drayage trucking and chassis.

This conference has several sessions that directly address drayage trucking and chassis availability – and I’d encourage you to attend them if you can. There are other sessions – for example Wednesday morning’s technology forum dealing with the Port of LA/GE information portal – that indirectly, but usefully, also address trucking and chassis issues.

The nexus among terminals, trucks and chassis providers is central to reducing congestion, improving cargo velocity and optimizing the performance of American importers’ and exporters’ supply chains. It’s one of the most challenging issues we currently face – and one that we, as an industry and a nation, must resolve.

FMC Supply Chain Innovation Teams

I undertook the FMC Supply Chain Innovation project because the Commission, led by Mario Cordero, was concerned about port congestion. If we can harmonize the behavior of the actors in our supply chain and stop working at cross purposes, it will boost American economic growth and competitiveness.

The "value proposition" of the work of our FMC Supply Chain Innovation Teams – three import teams and three export teams—is defining the need to provide critical, timely information visibility throughout our international supply chain.

One of our export teams also considered a "premium service" approach to address the chronic problem of export container availability.

Process innovations that apply information technological advances to our international freight delivery system is the route to transforming our international freight delivery system. To accomplish this, all supply chain actors—from ocean carriers to cargo owners—must change the way they think about and act in our international shipping system.

By the way, this includes government regulators, too.

Supply Chain System Complexity

Our international commercial supply chain is a complex, dynamic ecosystem and the constant interactions within the system make it difficult to develop solutions in isolation from each other. We must look beyond the dock and the terminal gate, "step out of our silos," and identify ways to make critical information available to supply chain actors.

As systemic complexity grows, the solutions to supply chain operational problems become less obvious. The Federal Maritime Commission launched the FMC Supply Chain Innovation Teams project to change the way we think about and act in the American freight delivery system.

Our Teams contained industry leaders from seaports, marine terminals, liner companies, cargo owners (importers and exporters), ocean transportation intermediaries, drayage trucking companies, warehouses, and longshore labor.

They are an impressive group.

The approach of our initiative is based on two basic concepts: Process innovation and small team engagement. Process innovation: incremental improvement on past operational success; and Small team engagement: no more than 12 members to a team, direct engagement with a specific purpose.

I challenged our Teams to "step out of their enterprise silos" and choose one significant operational innovation that would improve supply chain reliability and resilience.

Our Teams agreed that dramatically increasing supply chain visibility among major supply chain actors is THE operational innovation that would make the greatest improvement in overall supply chain system reliability and resilience.

This project is different from other IT projects you’ve heard discussed, most of which focus on gaining efficiencies from digitizing certain individual business operations.

The goal of our project is to use information technology to provide critical information visibility to major supply chain actors, allowing them to act in harmony, not at cross purposes, in the supply chain "ecosystem."

To increase supply chain systemic visibility, we asked our teams to identify critical pieces of information that they need, and not only large data bases used by liners or port terminals for their own business purposes.

Defining critical information is not as easy as it may sound. It required supply chain actors, especially cargo owners, to carefully identify what they need to know, when they need to know it, and why.

This approach is essential to actually change behavior in the supply system.

For U.S. importers a key question is: When can I pick up my container from the marine terminal? For exporters, the questions are: When and where can I get an export container, and when should I deliver the full container to the marine terminal?

Those questions are not only difficult to develop, they are difficult to answer. To tell a cargo owner when an import container is available for pick up, for example, a marine terminal must know about chassis availability, terminal yard operations and other port activities, among other things.

Port Congestion Solution

These underlying challenges have to be addressed before critical information can be made available. Full supply chain visibility is THE key to eliminating port congestion. Without critical, timely information, we will continue to fly blindly right into each other.

With the right "actionable" information, at the right time, we’ll just fly!

I am closely following the Port of Los Angeles/GE project, now joined by the Port of Long Beach, and its increasing potential to become a national seaport information portal.

Regulatory Reform

When I joined the Federal Maritime Commission, after having handled the Ocean Shipping Reform Act, I expected that the Commission would continue incremental shipping deregulation. I was, unfortunately, too optimistic, but nonetheless, I have continued to advocate for eliminating ineffectual and obsolete regulations.

Eliminating unnecessary government compliance costs from our supply chain will benefit everyone. I am pleased that we made progress last year and reduced regulatory compliance requirements for Service Contracts and NVOCC Service Arrangements.

The new approach was well received – especially because it allowed amendments to service contract and NVOCC arrangements to become effective upon agreement between the parties rather than waiting until they were filed with the Commission.

Subsequently, the Commission proposed to amend its rules governing NVOCC service arrangements to remove current filing and publication requirements. We also invited comments on how allowing NVOCC rate arrangement to include non-rate economic terms would impact commercial operations. The comment period closed at the end of January. I was pleased to see that almost all the comments were strongly supportive of our deregulatory approach.

Last March, following the Trump Administration’s executive orders on deregulation, the Commission established a Regulatory Reform Task Force to identify ineffective or unnecessarily burdensome regulations and make recommendations for their revision or elimination.

We published a Notice of Inquiry at the end of last May, offering suggested changes that our stakeholders would like to see. Currently, the Commission staff is currently reviewing the responses that we received

As things stand at the moment, I expect to see several central questions arise early in the reform process: First: Is the FMC’s tariff publication requirement – and its efforts to enforce those tariffs -- a regulatory activity that has outlived its usefulness? Second: Do any benefits accrue from our unique legal requirement that service contracts, and similar instruments, continue to be filed with the Commission? And also: (One of my favorites) Should the Commission publish competition and regulatory enforcement guidelines?

Removing obsolete regulatory requirements will allow the liner industry to develop commercial practices that meet the needs of their customers, not the government.

New Investigation

Finally, you may have seen the Commission Order released yesterday designating me as the Investigative Officer for an investigation into detention and demurrage practices generally. We’ll release details about my approach to the investigation soon.

Conclusion

Why are we doing all this?

Because I believe that repealing obsolete government regulations, and enhancing the performance our overall freight delivery system will provide a strong boost to American economic growth and competitiveness.

Thank you all for your attention. If we have time for questions, I’ll be happy to address them.